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Towards an Internet of Things Framework for
Financial Services Sector
Vemula Dineshreddy
1.SCIS, University of Hyderabad, Hyderabad, India
2. Institute for Development and Research in Banking Technology, Hyderabad, Telangana, India
dineshvemula@gmail.com
Abstract The ability to apply state-of-the-art Internet of
Things (IoT) technology to extract customer insights through
analytics by shaping the information into consumables for other
connected systems is creating a lot of opportunities for banking
and financial services. This paper presents an architecture based
on Internet of Things for banking and finance sector by
managing, mobile, household devices, wearable sensors and other
sensing devices for various applications including retail banking,
insurance, and investments. We have presented a case study of
different banking applications flow with IoT-intelligence by
analyzing users' data. In addition, we have a mapping of the
proposed architecture onto the various applications of banks and
financial services.
KeywordsInternet of Things; big data; financial services;
I. INTRODUCTION
The Internet of Things (IoT) is a trending communication
paradigm that embeds some intelligence in the objects of
everyday life that are interconnected to communicate, transfer
messages, take decisions, make predictive actions and provide
appropriate services [1]. IoT is applied for several applications
including healthcare, smart cities, agriculture, earthquake early
detection, smart homes, traffic congestion, waste management,
smart grid, smart environment, and intelligent shopping.
The development of branchless banking services via
multiple communication channels has made it possible to
create a new kind of added value for customers, in the
banking and financial service sector. With the growing use of
mobile phones, especially other wireless devices such as
wearable and sensors, has made the IoT as a tool to improve
customer experience, a logical development in electronic
banking [2]. Potential applications of the IoT in these sectors
include insurance through telematics, life and health insurance,
investment management and workers compensation in the
commercial arena. IoT will definitely enhance the customer
experience and enhance overall network infrastructure in
banks. However, IoT implementation becomes effective if and
only if the big data analytics and cloud accessibility are
integrated with the IoT structures.
IOT FRAMEWORK FINANCIAL SERVICES
This paper presents a conceptual framework and design
model leveraging the state-of-the-art IoT technologies for data
processing and performing analytics in banking and financial
services sector. We analyzed this model considering a case
study of investment management, which improved customer
satisfaction. We presented the deployment model with
mappings of functional modules to the architectural view.
The remainder of this paper is organized as follows.
Section 2 presents related work on using Internet of Things in
various sectors. Section 3 describes our proposed framework
that highlights the tasks performed at various layers. Section 4
presents a case study on IoT for investment management with
functional modules. Section 5 describes concluding remarks
and challenges in implementing Internet of Things for financial
organizations.
II. RELATED WORK
Nowadays, Internet of Things is applied for various
applications in various sectors. Nicola et. al [12] illustrated
unified IoT communication framework requirements and
focused mainly on communication requirements for health care
applications such that they can be offered as a web service.
Xiaojun et. al [4] presented on agricultural facility units using
IoT in Beijing, enabling remote diagnosis, early warning,
command decision about the diseases and pests, intelligence
control of water and tracing about facility agricultural products.
The concept of IoT is explained in technology and application
perspectives with the use of IoT in agricultural production and
agricultural product supply system in [5]. Foschini et. al [6]
investigated the design and implementation of an M2M
application on top of currently available solutions for traffic
management. The application of IoT in smart cities with
technical solutions and best-practice guidelines adopted in the
Padova Smart City project are discussed in [7]. An architecture
focusing on data acquisition and evaluation of unstructured
data using different options like map-reduce is proposed in [8].
However, this architecture lacks features like sensing and data
transfer of millions of heterogeneous devices.
Although today, in banking and financial service sector,
online and mobile banking systems deliver reasonably high
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quality services to consumers, the customer satisfied and

the quality of services could be made better by using Internet what actions can be
of Things technologies. To the best of our knowledge, there is performed using this data.
no framework using IoT and analytics for banks and financial
organizations today.
A. Device Management Layer
III. PROPOSED FRAMEWORK The main source of data is the device management layer at
the bottom. This layer consists of various types of IoT devices
Fig. 1 shows the proposed framework for IoT based financial
which must have direct (Ethernet or Wi-Fi) or indirect
services system. With our proposed framework customers can
connection (Zig Bee gateway, mobile phone, low power radios
be provided targeted offers based on a statistical study of
etc.) to the internet. This layer performs various functions
income, accounts and balances. With connected things it is
such as gathering data from sensing/edge devices, connection
possible to act on point or individual events and provide
of devices and transmission of data at regular intervals. These
response to customers based on inbound requests. We can
devices interact with an intelligent gateway to perform the

Fig. 1. IoT based framework for financial service sector

create targeted offers based on anticipated life and financial

authentication and authorization [9], initial data aggregation,
events predicted from spending activity and dynamically
filtering, correlation, etc. For efficient identification and
change the way a customer to be treated based on spending
security, devices which support IPv6, short-range wireless
behavior and financial impact. This framework explores what
technology, long-range communication and Geo-networking
information can be tracked by the banks that was not available
are recommended. The data from device management layer is
in the past, what are the critical things to be tracked to keep
then funneled through a communication layer.

IOT FRAMEWORK FINANCIAL SERVICES COPYRIGHT GEOITHUB.COM


Fig. 2. Flow representation of different bank applications with IOT-intelligence
B. Communication Layer
This layer performs the functions of the networking and
transport layers of traditional internet architecture. This layer
resolves the data formats of different vendors and protocols
and provides an effective logical addressing with greater
detail to operate with IoT applications. This layer performs
data encryption, filtering and interference avoidance. The well
known potential protocols are HTTP/ HTTPS, Constrained
Application Protocol (CoAP) and MQTT- 3.1. This layer
supports dynamic routing according to the changing network
conditions. Another important action performed by this layer
is changing over client characterized system execution
parameters to fitting QoS policies.
C. Integration Layer
This layer performs integration of structured and unstructured
data, which enables data warehouse and analytic architecture.
This layer fills the gap between traditional and present
processing environments with the ability to capture all of the
data types and domains. Most importantly, it provides
scalability, speed and value.
IOT FRAMEWORK FINANCIAL SERVICES
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D. Event Processing and Analytics Layer
This layer handles the streaming events coming through and
performs analytics with data being integrated. This layer act as
an interface between user applications and lower modules.
The Business Intelligence module is equipped with querying
and reporting tools. The "reductions-results" are loaded from
integration environment to a data warehouse for advanced
analytics. This structure offers in-place analytics, which
reduces the burden of moving the data to another analytical
environment. This layer helps banks to analyze the data, takes
decisions based on reduction-results and user actions, and acts
on behalf of the customer using predictive analytics. The
dataset is analyzed to extract knowledge and patterns to make
informed decisions. This layer includes a developer suite to
enable developers to build smart applications and tools using
IoT services. This layer act as a middleware which provides
us with the infrastructure as a service. This infrastructure is
used to empower new income streams, and enhance
operational efficiencies through innovations.
E. Application Layer
The application layer acts as an interface between the
developed applications and underlying infrastructure. It
provides services for different applications to communicate
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with the shared protocols and
interface methods. The application layer sends information
about performance parameters to the underlying layers.
Various protocols are developed and used to exchange data
between versatile.
IV. CASE STUDY
IOT FOR INVESTMENT MANAGEMENT
We consider a system for investment management that must
process data from heterogeneous devices received either by
streaming (sensors, trades, telematics or data from wearable)
or in batches (financial statements, expenditures) and takes
decisions to create, manage customer accounts and offer on
the fly offers and rewards in case retail banking and loans.
Data processing involves the collection, integration, analysis
and complex workflows depending on external conditions or
the presence/absence of other relevant data that needed to be
processed. By accessing the data of customers' daily lives, this
system enables banks to better understand the customer's
needs, financial status, and collateral value, while automating
the process of opening an account, taking loans and insurance
etc.
Fig. 3. Mapping of functional modules to layers of the framework
IOT FRAMEWORK FINANCIAL SERVICES
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Fig. 2 shows the functional
modules of IOT based investment management systems. It
consist of various devices for monitoring customer's
purchasing, driving behavior, location and other activities
using the sensor devices placed in wearable, mobiles, health
care devices etc. The controller services shown in the figure
runs the local services to continuously monitor the devices and
sends data to the database (sometimes in cloud) using data
services. These services utilizes the service oriented
interactions to operate with cloud if needed.
In Fig. 3 we have presented the mappings of functional
modules to the layers of the proposed framework. The devices
such as wearable, mobiles, sensors in homes and cars etc are
mapped to the physical devices management layer of the
framework. The controller services plays the role of
communication layer in the architecture. Interactions,
databases and data services are mapped to the integration layer
and also to the access management layer for security reason.
All the actions like processing data and applying IOT
intelligence are mapped to event processing and analytics
layer.
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IOT FOR LOAN
PROCESSING
In the existing systems, for taking loan, a customer starts with
a formal application which requires certain basic information
such as address, income, employment, educational and
property details. The motivation behind the whole practice is
to discover the suitability of a candidate for the credit. But
verification of the income documents, statements and other
will take few weeks to months and no guarantee that the
customer will get the loan [10]. With IoT based system,
predicting the financial health of the customers using the
decision making will make banks and clients simpler to begin
and keep up the advance procedure including finishing the
different customs amid the whole period. This system follows
the same in case of opening an account.
IOT FOR RISK-AWARE SHOPPING WITH CUSTOMER
SPECIFIC OFFERS
Nowadays banks are going with mass messaging about
their products to customers [11]. But with huge amount of
granular data from connected things tomorrow's bank provide
customer specific products and offers based on customer's
overall financial status. The proposed system offers customers
what they want. This system can analyze geographical data
and identify offers and deals from other nearby sellers and
alert the customer before he swipes their debit or credit card in
a mall. Also, this system enables banks to provide location-
based discounts on retail shopping and making customers
aware of their financial position to avoid risk.
V. CONCLUSION
In this paper, we proposed a conceptual framework based on
IoT for banking and financial services sector. We proposed the
framework with heterogeneous objects interacting with the
physical environment. The distinctive features of this
framework are high reliability, multicast, dynamically
expandable using a modular approach, efficient quality of
service management with integrated analytics platforms in-
place. Using a case study, this framework combined bottom-
up reasoning about design guidelines and exploring the
technical consequences of architectural design choices. The
proposed framework permits banks to create applications in a
way suitable for their own particular prerequisites such that
they meet distinctive necessities for maintaining quality of
service requirements.
The technology of Internet of Things is opening
several possibilities for the future of banking and financial
services. A major challenge in implementing IoT technology
in banks is that support of legacy IT infrastructure. So, it
needs to be remodeled to simplify the complex systems and to
IOT FRAMEWORK FINANCIAL SERVICES
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support new technologies
effectively. Some of the
technological issues surrounding the internet of things are
identity management, energy efficient sensing, greening IoT,
scalability, security and privacy, communication mechanism,
integration of smart components and global co-operation. The
scientific challenges include data exchange between
heterogeneous elements (interoperability), effectively
handling uncertain information and service adaptation in the
dynamic system environment .
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